PARTNERSHIPS

To define what is meant by a business

partnership.

To understand who owns, manages and shares the

1.       profits in a business partnership.

To investigate a Deed of Partnership.

 PARTNERSHIPS

A group of people (often with similar interests)

who come together to share the workload and
responsibility of running a business.
Minimum 2 – Maximum 20

Lawyers Architects Accountants

Any Others??
 A shared
Shared workload
ownership

Share
profit

Shared
decision Shared
making liability for
debts
 PARTNERSHIPS

Each partner is responsible for the entire debt of the

partnership, so if one partner makes a bad decision then it
has to be met by all of the partners.

UNLIMITED LIABILITY
 OWNERSHIP & MANAGEMENT

Unless stated in the “Deed of Partnership”; Partnerships have

Equal
Ownership

Equal
Management
Equal
Share in
Profits
 PARTNERSHIPS

•Why Partnerships?

•The main reason is usually to expand the business by an increase in capital or to

gain specialist skills that are required for the business to develop

•Who owns a partnership?

 
•The business is owned by the partners equally e.g. if there are 3 partners then
they will each own a third of the business, this is the case unless stated
otherwise in the deed of partnership.

•Who manages the business?

 
•The partners share the control of the business equally unless the partnership
agreement states otherwise. In many partnerships each partner may run a
separate department.
 SETTING UP A PARTNERSHIP

Deed of
Partnership

•How profits and losses are to be shared.

•How much money each partner has put into the business
•How much each partner gets paid – “salary.”
•The working arrangements of the partnership e.g. who has
responsibility for which part of the business
•Arrangements for removing a partner or adding a partner to a
business.
•Arrangements for ending the partnership and the dividing up the
assets once the partnership is dissolved.
 DEED OF PARTNERSHIP
•This legal Partnership is between:

•The name of the Business will be:

•The Business activities are:

•Each Partner agrees to provide the sum of: £

•The duties of the partners will be as follows:

•The bank account will be in the name(s) of:

•Profits will be shared out:

•Wages paid will be:

•Regular Meetings:

•Overall Decisions on business:

•Leaving the Partnership:

ADVANTAGES OF FORMING A PARTNERSHIP

•Easy to set up.

•Business can gain professional help through taking
on a qualified partner.
•New Partners - New Ideas
•Extra partners bring extra capital
•Responsibility for running the business (both
decision making and workload) is shared
•Finances are kept private
•Division of labour leads to greater expertise
DIS ADVANTAGES OF FORMING A PARTNERSHIP

•Unlimited liability for the debts of the

business
•Finance still limited
•Lack of continuity
•No consultation required (Deeds of
Partnership are only recommended)
•Decision making more complex